An investigation by HMRC found that Roderick Bond, a former police officer, and Lee Palmer, a financial market trader, had invested in the Formula 1 Projects partnership scheme that involved claiming false tax rebates for a film featuring F1 racing stars which was never made.

Independent financial adviser Simon Osborne was jailed for his part in introducing former Wales international rugby union player Simon Hill to the scheme.

HMRC said Potter conspired with Palmer and Bond to steal the tax cash along with financial adviser Osborne. Osborne introduced Hill to the partnership and Hill also submitted fraudulent tax repayment claims to HMRC.

The partnership members had to show they were working at least 10 hours a week in the business. If the partnership made a loss, the members would be able to claim a share of its losses against their own income.

The claims were supported by individual diaries running to hundreds of pages produced by Potter and sent in to HMRC by Bond, Hill and Palmer to substantiate their tax rebate claims, setting out their work day by day over 15 months.

The scheme saw investors claim significant financial losses on the £6m they claimed to have spent between March 2008 and May 2009. These artificial losses enabled the investors to falsely claim around £40,000 in tax relief for every £20,000 they had invested.

HMRC investigators identified a series of suspicious tax repayment claims, which had originated from partnerships set up and managed by Potter. The majority of the tax refunds claimed by investors were withheld and £210,000 that had been paid out has since been recouped by HMRC.

At a trial at Southwark Crown Court, Hill admitted tax fraud and was sentenced to 20 months in jail, suspended for two years. He also has to do 300 hours unpaid work. Bond, Palmer and Osborne were each convicted of conspiracy to cheat the public revenue and were sentenced to two years and eight months each in prison.

Simon York, director, fraud investigation, HMRC, said: ‘These men tried to cheat the system by claiming tax relief on a non-existent film and were thwarted by HMRC investigators who work tirelessly to stamp out fraudulent activity.’

Defendants in two other trials linked to this latest case have all been jailed for their part in the scam. Potter, who is already serving eight years in jail, pleaded guilty in September 2017 to his role in the Formula 1 Projects conspiracy. At a hearing in October 2017 his sentence was not increased but he was disqualified from being a company director for eight years.

Report by Pat Sweet